Enerkem ‘committed’ to Pontotoc ethanol project

PONTOTOC – On the east side of Beulah Grove Road, several hundred yards off Highway 278, is the site for Enerkem Mississippi Biofuels.
But instead of a gleaming new ethanol-producing plant, it’s an empty lot for a power substation for the plant, which still is in its planning stages.
Next to the clearing is a 35-acre wooded site where Enerkem’s plant is supposed to go.
Four years ago, EMB’s parent company, Montreal-based Enerkem Inc., announced its plans to build a $250 million ethanol-producing plant that would create 150 jobs.
Company officials later clarified that it would be a $100 million project, creating 70 jobs, with the larger figures coming from an expected expansion of the facility.
But to expand, there has to be an initial facility. And the project is at least a year behind schedule. Nevertheless, the company says it’s forging ahead, despite delays, including a withdrawn initial public offering to raise capital last year.
“Enerkem is committed to realize this project and is working diligently with its local partner to complete the necessary business arrangements and move the project forward,” said Enerkem’s director of communications, Annie Pare.
“In fact, it might be worthwhile to mention that Enerkem Mississippi Biofuels recently bought a piece of land adjacent to the landfill in Pontotoc, and this is where construction of the facility is expected to begin in the second half of 2013.”
Indeed, last October, Enerkem paid $70,000 for the 35-acre site next to where the power substation will be. It also paid about $10,000 for the value of the timber on the site.
Still, there are worries that Enerkem’s project, like another nearby ethanol refinery project, will never come to fruition.
BLUEFIRE PLANS
Enerkem’s venture has parallels to BlueFire Renewables’ plans in nearby Itawamba County.
Four years ago, the California company announced its plans for a $300 million ethanol-producing plant in Fulton, where it would employ 70-80 people.
In 2011, BlueFire announced it had secured an equity partner in China Hudian Engineering Co., with the Chinese company taking a 50 percent stake in the project.
Site preparation was completed in Fulton that year as well, but there’s still no ethanol-producing facility.
Enerkem has $110 million lined up from U.S. government sources: $50 million grant from the Department of Energy and $60 million loan guarantee from the Department of Agriculture. It also has backing from energy giant Valero, Waste Management and others.
Still, Enerkem isn’t ready to get started on its Pontotoc project. It’s working on a similar plant in Edmonton, Alberta, Canada first.
In BlueFire’s case, it appears to be focusing first on a cellulose sugar plant with a partner in South Korea before turning its attention to Fulton.
But while BlueFire would use green and wood wastes from around the region as feedstock to produce ethanol, Enerkem would use mainly municipal solid waste it would get from the Three Rivers Landfill.
Last week, the Itawamba County Development Council said BlueFire’s plant has gone on “indefinite hiatus.”
In Pontotoc, officials say Enerkem’s project is delayed, but isn’t dead.
Ronnie Bell of Three Rivers Planning and Development District said a confidentiality agreement between Enerkem and related groups, including TRPDD, prevents him from saying much. But he said the project is still viable.
Three Rivers is the administrator of the Three Rivers Regional Solid Waste Management Authority, which oversees the landfill.
Enerkem’s Pare said the Pontotoc project remains “under development.”
“The project is currently in the design phase,” she said. “We continue to work with the Three Rivers Solid Waste Management Authority, our local partner in this project, and we are also making progress in order to meet the DOE’s requirements. Construction is expected to begin in the second half of 2013 and should take approximately 18 months.”
That would mean the biorefinery would be operating by 2015. That’s important, according to Bell, because in September of that year, the DOE’s grant sunsets.
Rick Faucette, the chairman of the waste authority, said, “It’s been a long, arduous process we hope to bring to fruition soon. From the onset, we’ve wanted to be sure the project has not been a financial risk to the solid waste authority. If we’re able to work successfully with Enerkem, it would benefit the entire region.”
EDMONTON PLANT
Enerkem’s Edmonton plant is expected to begin this year. But the company also is working on another facility, too. That plant, in Varennes, Quebec, has received $27 million in funding from the government there. All three facilities in Edmonton, Varennes and Pontotoc would use municipal solid waste to produce ethanol.
Pare said Edmonton’s plant is expected to begin operations this summer.
“In Varennes, construction is expected to begin by early 2014,” she said, noting that in both Varennes and Pontotoc, construction should each take about 18 months once work begins.
But how much capital does Enerkem have left to raise to start its Pontotoc and Varennes projects going?
Last year, it had planned to raise $125 million in a public offering, but withdrew it, citing “market conditions.”
The company insisted at the time it would forge ahead with its projects, including Pontotoc, despite the IPO withdrawal.
Marie Helene-Labrie, the company’s vice president of government affairs and communication, said at the time that Enerkem had raised more than $100 million the previous years through corporate and government financing.
Privately held, Enerkem declined to reveal what financing it now has in place – or still needs.
“As a private company, we are not in a position to discuss the details of these financial arrangements,” Pare said.
Enerkem Mississippi Biofuels has an office at 222 West Reynolds Street in Pontotoc, but there’s little sign that it’s occupied, though company officials note it’s “open.”
There were a handful of people working from the office as late as last spring, but it’s unclear if the company has anyone working there now.
Enerkem indicated the company is concentrating on its other efforts for now.
“Our recruitment activities are currently focused on our project in Edmonton where operations will begin this summer,” Pare said. “Approximately 10 resources have been working on the development of the Enerkem Mississippi Biofuels project since 2010. These resources are based in different locations including Houston (Texas), Montreal (Quebec) and Sherbrooke (Quebec).
“The project office in Pontotoc is open and the local recruitment process will be launched as we get closer to groundbreaking, beginning with a project manager.”
dennis.seid@journalinc.com